Online Ir Trends Sample Pages

Online IR Trends

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Vol. 2, 2008

The information in this report is not intended as legal advice. Readers should seek specific legal advice before acting on subjects mentioned in this report.

Online Investor Relations Trends

IN BRIEF

Mobile-Only Websites Obsolete!? WHEN the head of a company dedicated to the mobile web throws in the towel, people take notice and the headlines are certain to be bold. That happened in April 2008 when Russell Beattie, CEO of Mowser, a prominent web service that adapts traditional websites for viewing on mobile phones, announced that he was selling the company because “mobile traffic just isn't there. It's not there now, and it won't be.” 10

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Better devices with full web browsers that can display a traditional website, such as Apple’s iPhone, make mobile websites redundant, said Beattie. He cited research from MMetrics which found that in the US 85% of iPhone owners browsed the web vs. 58% of smartphone users, and only 13% of the overall mobile market.

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Beattie said even the top mobile sites were attracting less traffic than major blogs, nevermind major web portals. To be clear, what Beattie is referring to are websites designed specifically to be viewed on mobile phones. He argues that the user experience is so poor that people won’t put up with it.

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Meanwhile, mobile browser company Opera Software confirmed the trend away from mobile specific websites to the full web in a report in May 2008 which found that full web surfing comprises more than 77% of all traffic generated by the 11.9 million people who used its Opera Mini browser in 11 March. Interestingly, the company noted that almost 40% of mobile traffic worldwide is to social networks like MySpace and Facebook.

Opera Mini browser users are consuming 88% more data per person than a quarter earlier.

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While developing mobile-only websites may be pointless if people have no interest in using them, that does not mean traditional websites should not become more mobile aware. Most traditional websites can be redesigned to provide a better user experience for these mobile users, including using location information to tailor information and services to users. The incentive to do so is in the numbers. According to an April 2008 report by IBM 12, the number of users of mobile Internet services is expected to grow by nearly 200% to approach 1 billion in the next few years, driven in part by new devices.

Still, even if the user experience is fixed, another major obstacle stands in the way. In some countries, mobile data plans have failed to keep up with new devices. Users of smart phones using a full-featured browser tend to consume larger amounts of data (see chart above). That makes surfing the web on a 10

http://www.russellbeattie.com/blog/the-end-of-mowser http://www.opera.com/mobile_report/ 12 http://www-935.ibm.com/services/us/gbs/bus/pdf/gbe03051-02-usen-gomobile.pdf 11

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Online Investor Relations Trends

IN BRIEF

mobile device expensive in many countries. A recent survey in Australia, for example, found that 91% of respondents don't use their phone to access the Internet because they believe it costs too much or 13 offers a poor user experience. An IBM survey of 700 mobile users in various countries also found that cost was a key issue. We will continue to monitor and report on mobile developments in upcoming reports.

US Companies Avoid Shareholder Forums

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IN A prior issue (see Vol. 1, 2008), we asked: “Shareholder Forums: What’s Your Response?” The answer seems to be a non-response.

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Not one company has launched or participated in a shareholder forum since February 25, 2008, when the US Securities and Exchange Commission’s flexible new rules for electronic shareholder forums became effective. Oil company Hyperdynamics Corp, which announced that it would launch a forum, later decided not to. It said it feared it would be overrun by short-sellers and pump-and-dumpers.

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“First, badly constructed e-forums may be hijacked by vocal individuals and turned into platforms for launching anti-management tirades. Perhaps even more troubling, e-forums will improve the ability of hedge funds and other activist investors to mobilize against companies,” the law firm said.

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The company appears to be echoing the sentiments expressed by law firm Latham & Watkins LLP. It issued a 9-page report 14 saying that “e-forums may not be of much value” and raising concerns about the risks for companies.

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Meanwhile, a survey by Thomson Financial in February found only 4% of 42 public companies were seriously considering an electronic shareholder forum, while 56% were not considering the idea, and 40% weren’t sure. Despite this, the one company that has offered a forum, which it did prior to the SEC’s new rules, is doing so again this year. AMERCO Inc’s investor relations director Jennifer Flachman was quoted by 15 Reuters as saying: "It kind of levels the playing field for those who might not be comfortable speaking up at an earnings conference (call) or annual meeting."

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Web Content Accessibility Guidelines 2.0 Progress to Candidate Recommendation

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THE Web Content Accessibility Guidelines (WCAG) working group announced the publication of WCAG 2.0 as a Worldwide Web Consortium (W3C) Candidate Recommendation on April 30.

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This is the third or five steps to WCAG 2.0 becoming a formal recommendation of the W3C, which is the standard-setting body for the Internet. The guidelines, which are likely to influence accessibility regulations worldwide, explain how to make websites, applications, and other content accessible to people with disabilities and many elderly users.

Candidate Recommendation status signals that there is broad consensus about the standards in the working group and among public reviewers. The primary purpose of the stage is for developers and designers to "test drive" WCAG 2.0 to demonstrate the guidelines can be implemented. We strongly recommend that IR website managers and web developers review and begin implementing the guidelines. See http://www.w3.org/WAI/WCAG20/quickref/ 13

http://www.smh.com.au/news/web/australians-steer-clear-of-mobileweb/2008/04/15/1208025137230.html 14 http://blogs.law.harvard.edu/corpgov/files/2008/02/january_2008.pdf 15 http://www.reuters.com/article/reutersEdge/idUSN1655068620080516?sp=true

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Online Investor Relations Trends vol 2, 2008 Feature: Online Annual Reports

Online Annual Report Innovations in 2008

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The 2008 annual reporting season was the first season where companies in the United States and the United Kingdom had the option of delivering their reports on the web as the default option. This was also the first year that all large US companies were required to post their annual reports and proxy statements online in formats “convenient” for both onscreen reading and for printing. Consequently, we expected that more companies would make long-overdue investments to improve the usability and interactivity of their reports.

“There appears to be widespread ignorance in the market about what is an effective format for online annual reports.”

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Most US firms that took advantage of default electronic delivery posted their online reports in hard-to-use image-based formats. This is somewhat surprising given that the usability problems with these formats have been well documented for several years. Issues include hard-to-use navigation, fuzzy text and, perhaps most important, an inability for analysts, investors and journalists to copy and paste text or figures from the documents because they are essentially photographs of printed annual report pages. In many ways, image-based reports are less usable even that bulky PDF files, which also continue to be a common format in which companies post their annual reports.

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That did not happen in the US. Not by a long shot. Despite the US Securities and Exchange Commission (SEC) explicitly requiring usable documents, our reviews have found that almost 90% of companies chose formats that do not live up to the spirit or letter of the rules. Ironically, in the United Kingdom where the Companies Act is silent on the usability of online annual reports, more FTSE 100 companies provided full HTML reports this year compared to last year -- 46% versus 32%. 16

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There appears to be widespread ignorance in the market about what constitutes an effective format for online annual reports and proxy statements. From our discussions with them we have learned that many companies are purchasing image-based and Flash conversions in the belief that these documents are “HTML.” In some cases, they are aware that they are not getting HTML, but they believe the document conversions are better options than simply providing a big PDF download. Furthermore, companies are being grossly overcharged for these unusable online documents because they are unaware that the conversion process is largely automated. The fact is, similar conversions are 17 available for free in as little as 5 minutes from a variety of services.

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Small group continues to innovate

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Our research this season has found that a small group of companies are making significant investments and improvements to their online annual reports. European companies comprise the bulk of this elite class. The elite North American companies can be counted on one hand, and are mostly companies that have long histories of best practice online communications.

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Among the leaders, several new and interesting trends have emerged. Online annual reports are becoming more interactive and more customizable. The quality of the design and coding is also improving, with some reports meeting all of the standards of the World Wide Web Consortium (W3C), the standards setting body for the web.

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Although they can be a significant expense, high-end online annual reports and proxy statements are highly effective communications, disclosure and relationship-building tools. They engage, inform and educate investors, make it easier for people to quickly look up key facts throughout the year, and they demonstrate management’s accountability to shareholders and commitment to open and effective communications. Below is a summary of key trends we are seeing among top-tier online reports this season along with screenshots and links to examples.

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http://www.ry.com/files/teaser/7521/How_it_stacks_up.pdf http://www.irwebreport.com/daily/2008/02/07/free-online-annual-reports-in-5-minutes/

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Online Investor Relations Trends vol 2, 2008 Feature: Online Annual Reports

Flash video and animation Leading-edge online annual reports are deploying far more Flash video than in past years. The technology is being used for executive statements and corporate profile videos. In most cases, the videos are small, presumably to preserve bandwidth. Examples include Aviva, InterContinental Hotels Group, Legal & General, KPN, TeliaSonera and Vaisala.

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However, some companies are providing large, high quality video that include subtitles or slides and video within video. Outstanding examples include Philips and Neste Oil. Other examples include TELUS and AT&T .

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There is also much more use of Flash animation on report homepages and inside pages for charts, graphs and maps. Examples include PotashCorp, Aviva plc, SAP AG, Cameco, Wienerberger, TeliaSonera and Deutsche Post.

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Complex Flash video with synchronized slides and closed captioning can make a dull annual report come alive online. This example from Finland’s Neste Oil is particularly innovative.

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Online Investor Relations Trends vol 2, 2008 Feature: Online Annual Reports

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Philips used a high quality video with multiple camera angles, and integrated graphics to make a strong opening impression.

Flash can be used to add interactivity to charts, graphs and maps like this one from TeliaSonera that lets users learn about the company’s operations around Europe by clicking on countries on a map.

Copyright 2008 Clarity! Not to be redistributed.

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